K. J.

SOMAIYA INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

Comparison of the
international marketing
strategies of Nestle S.A.,
Unilever NV/Unilever PLC
and The Procter & Gamble
company
Research Paper
Vikas Sonwane

PGDM-IB 3rd Trimester |

Roll no. 53

Guide: Prof. C. P Joshi

Abstract
This paper aims to provide a comparison of international strategies adopted by the worlds three
biggest FMCG companies, Nestle S.A., Unilever NV/Unilever PLC and the Procter and Gamble
Company. Everything starts from analyzing the impact of globalization on the removal of cross
borders and the extent to which this is reflected into a trend towards a common, global strategy
manifested on the global market. Yet, this transition doesnt occur suddenly; any company
passing from a domestic position to a global one shall undergo several stages and adopt various
instruments allowing it to go forward. Building on this base, two perspectives have been
provided, a classical E.P.R.G framework was applied to learn how the companies have run
historically and how they have evolved, and a study of the present hybrid international
marketing strategies used by these companies.
Keywords: Globalization, international marketing, Nestle S.A., Unilever NV/Unilever PLC and
the Procter and Gamble Company.

Introduction
Globalization as a phenomenon can be defined as the growth of economic activity spanning
politically defined national and regional boundaries. It finds expression in the increased
movement across the boundaries of goods and services, viz. trade and investment, and often of
people via migration.1 This phenomenon leads to a rapidly changing and diverse competitive
global market; to survive and thrive in such an environment MNEs have to develop their
sustainable competitive advantage through an effective international marketing strategy.2 There
are different approaches to marketing in a globalized world. A centralised approach with a
national inward

orientation, centralized approach with international cooperation, a highly

dispersed approach with competition among independent units, dispersed and strong centre with
supportive role of foreign sub units. Nestle S.A., Unilever NV/Unilever PLC and P&G Company
are some of the worlds largest and oldest enterprises and each have their own international
marketing strategy to do business. This research paper conducts a comparison between these
companies international marketing strategies and how they execute them. The objective of the
research is to give a perspective of the international marketing strategies used by these
companies to compete on a global level and develop a theoretical framework explaining them.

Nestle S.A.
Nestle S.A., the Swiss multinational food and beverage company headquartered in Vevey,
Switzerland is the largest food company in the world measured by revenues. The international
marketing strategy adopted by Nestle is of a decentralized system which consists of specifically
molded facilities which are made to fit in to that country's culture, habit, and conditions. Nestl
uses the strategy which correlates the ratio of increase in income to use of branded food
products, which means as a person earns more and has less time for making food in his/her
home, they will automatically substitute for branded products. In general the companys strategy
has been to enter emerging markets early before its competitors and build a substantial customer
base by selling products which suit the local population such as infant formula, milk, and
1

Daniels, J., Radebaugh, L., Sullivan, D. (2009). International Business: Environments and Operations (12th
Edition). Upper Saddle River, NJ: Pearson Education, Inc.
2

Fraser, Cynthia & Hite, Robert E., 1990. "Impact of international marketing strategies on performance in diverse
global markets," Journal of Business Research, Elsevier, vol. 20(3), pages 249-262, May

noodles. Nestl narrows down its market share to many small niche markets, as opposed to
general or one for all strategies. Nestl keeps the goal of commanding the niche markets by
gaining at least 85% of market share in every food product it launches. Customization is the key
to Nestls global brand identity rather than universalism, which means Nestl, uses global brand
identity but, from the internal point of view, it uses local ingredients and other technologies that
resonate with the local environment and brand name that is known globally. 34

Unilever NV/Unilever PLC

Unilever, the Dutch-British FMCG company having operations in around 190 countries is one of
the foremost multinationals. It has evolved through actual practice as a business and not through
application of management theory; regardless of the process it has become transnational in the
most basic sense. Its fast-moving product portfolio requires proximity to local markets, although
economies of scale in certain functions justify some centralized control. Most important, a
flexible matrix of individual managers around the world shares a common understanding of
corporate strategy. Through all the changes, many based on trial and error, the company has
maintained two consistent practices: developing high-quality managers and linking decentralized
units through the "Unileverization" of those managers. In fact, many consider Unilever's
managerial recruitment and training policies to be the best in the world. The company has a
strong tradition of developing local talent in its subsidiaries, but the head office also expects
managers to gain experience in more than one country or product line.5 Unilever changed the
way international FMCG companies sell a product in developing markets that is you use a local
label and market to the elite. Unilever changed that. The Anglo-Dutch maker of such brands as
Dove, Lipton, and Vaseline built a following among the world's poorest consumers by upending
some of the basic rules of marketing. Instead of focusing on value for money, it shrunk packages
to set a price even consumers living on $2 a day could afford.6

Yavuz Kose, CHARM 2005, Nestle. A brief history of the marketing strategies of the first multinational company
in the Ottoman Empire.
4
The Economist, Aug 2004, Daring, defying, to grow.
5
Maljers, FA 1992, 'Inside Unilever: The Evolving Transnational Company', Harvard Business Review, 70, 5, pp. 4652
6
Capell, K 2008, 'UNILEVER', Businessweek, 4113, p. 47.

The Procter and Gamble Company

P&G Co., the American multinational consumer goods company headquartered in downtown
Cincinnati, Ohio, United States, is considered the most innovative FMCG product based
company in the world. Procter & Gamble has built an organization with an innovative culture.
Everybody can contribute to new product development either through research and development
or through their focus, energy and commitment to their role. This approach to innovation is not
new. For example, Procter & Gambles dedication to innovation led to the development of Flash,
a revolutionary brand for its time. Since its launch many hundreds of innovations now enable it
to cater for many more situations within the household much more efficiently. Similarly P&G
created the disposable nappy business by introducing Pampers. In a fast-changing world an
innovative culture helps an organization constantly move forward. Having an innovative culture
has actively helped Procter & Gamble develop and transfer technologies and bring new products
to market. Creating innovations that give people products which make their lives easier and
better is what creates a competitive advantage for P&G. And is what has helped P&G become
the

successful

global

business

it

is

today.

78

'COMPANY SPOTLIGHT: THE PROCTER & GAMBLE COMPANY' 2011, Marketwatch: Personal Care, 10, 10, pp. 1320, Business Source Complete, EBSCOhost, viewed 12 March 2014
8
'Procter & Gamble's innovation success: New research, new products, new markets' 2005, Strategic Direction, 21,
7, pp. 11-13,

Classical application of a theoretical framework

The classic research for developing international marketing strategies is done on the E.P.R.G
framework which asks international marketing managers how should they should cope with the
new scope of operations, and whether they can apply domestic strategies to international
markets.9

The E.P.R.G. Framework and Marketing Decisions10

A key assumption underlying the E.P.R.G. framework is that the degree of internationalization to
which management is committed (or willing to move toward) affects the specific international
strategies and decision rules of the firm. Based on this assumption and the nature of the E.P.R.G.
orientations, hypothetical profiles of typical marketing strategies associated with each orientation
may be inferred.

Ethnocentric Orientation
In the ethnocentric company, overseas operations are viewed as secondary to domestic
operations and primarily as a means to dispose of "surplus" domestic production. Plans for
overseas markets are developed in the home office, utilizing policies and procedures identical to
those employed in the domestic market. Overseas marketing is most commonly administered by
an export department or international division, and the marketing personnel is composed
primarily of home country nationals. No systematic research is conducted overseas, and no major
modifications are made to products sold in overseas markets. Prices are calculated on the same
basis as in the home market, with the addition of overseas distribution costs. Promotion and
distribution strategies are similar, to the extent possible, to that employed in the home country.
The sales force is trained and hired in the home country. It operates from a home country base,
and there is likely to be strong reliance on export agents.

Polycentric Orientation
In the polycentric stage, subsidiaries are established in overseas markets. Each subsidiary
operates independently of the others and establishes its own marketing objectives and plans.
Marketing activities are organized on a country-by-country basis, and marketing research is
conducted independently in each country. Separate product lines are developed in each country,
and home country products are modified to meet local needs. Each subsidiary establishes its own
pricing and promotion policy. The sales force in each country is composed of local nationals, and
the channels of distribution are those traditionally used in each country.
9

Wind, Yoram, Susan P. Douglas, and Howard V. Perlmutter. "Guidelines for Developing International Marketing
Strategies." Journal of Marketing 37.2 (1973): 14. Print
10
Howard V. Perlmutter, "The Tortuous Evolution of
the Multinational Corporation," Columbia Journal of
World Business, Vol. IV, (January-February, 1969) pp. 9-18

Regiocentric and Geocentric Orientations

In the regiocentric and geocentric phases the company views the region or the entire world as a
potential market, ignoring national boundaries. The firm develops policies and organizes
activities on a regional or worldwide basis. Marketing personnel include people from the region
or from any country of the world. Standardized product lines for regional or worldwide markets
are developed, and pricing is established on a similar basis. Promotional policy is developed
regionally or worldwide to project a uniform image of the company and its products. Regional or
global channels of distribution are also developed.
An exploratory empirical study was conducted to provide initial insights in the validity of the
framework. The perceptions and preferences of international executives toward the current and
future appropriateness of each of these alternative orientations and associated strategies were
assessed. The conclusions of the studies11 were that the degree of international orientation alone
does not appear to provide sufficient guidelines for developing international marketing policies
and there appears to be no single superior or dominant international orientation.

Theoretical Framework for the present globalized world12

Most of the firms are eyeing at the global marketplace to improve their competitiveness.
Considerable controversy has arisen in recent years, concerning the most appropriate strategy in
international markets. Deciding how to deal with the globalization of markets, poses tough issues
and choices for managers and their firms. they must consider both external environmental
forces and internal organizational factors, before they arrive at an international marketing
strategy. 13
However, as mentioned earlier, every industry cannot be a global industry, and some have to
adopt multidomestic strategy. Table-2 lists four dimensions and their respective positions under
pure multi-domestic strategy and a pure global strategy. For each dimension, a multi-domestic
strategy seeks to improve worldwide performance by maximizing local competitive advantage,
revenue or profits. On the other hand, a global strategy seeks to maximize worldwide
performance through sharing and integration.

11

Howard V. Perlmutter, Functional Studies Using the

E.P.R.G. Categorization: Types of Headquarters Orientation Towards Subsidiaries in an International Enterprise,
Technical Memo B.R. 3:2, Division for Research and Development of Worldwide Institutions, Wharton School,
University of Pennsylvania; and David Heenan, "The E.P.R.G. Approach to the Manpower Development Function,"
Working Paper 1972, Wharton School, University of
Pennsylvania, Philadelphia.
12
Prafulla Agnihotri, Hemlatha Santhanam, International Marketing Strategies For Global Competitiveness
13
Porter, ME 1990, 'The Competitive Advantage of Nations. (cover story)', Harvard Business Review, 68, 2, pp. 7393.

Industry Globalization drivers

Market Drivers
Cost/Economic drivers
Convergence of lifestyles & taste
Continuing push for economies of scale.
Increased travel creating global consumer Accelerating technological innovation
Growth of global and regional channels
Advances in transportation
Establishment of world brands
Emergence of NIC
Push to develop global advertising
Increasing cost of product development
Shortening product life cycle
Government Drivers
Competitive Drivers
Reduction of tariff barriers
Increase in level of world trade
Creation of trading blocs
Increase in foreign acquires of corporation
Decline in role of government
Companies becoming globally centered
Reduction in non-tariff barriers
Increased formation of global strategic alliances
Shift in open market economies
Globalization of financial markets
Table 1: Henry Mintzberg, James Brian Quinn, 1996, The Strategy Process Concepts, Contests, Cases.14

Dimensions
Market Participation
Product offering
Market approach
Competitive Moves

International Marketing Strategies

Setting for pure multi- Setting for pure global
domestic strategy
strategy
No particular pattern
Significant share in major
markets
Fully customized in each Concentrated one activity in
country
each country
Local
Worlwide uniform
Stand-alone for country
Integrated across country

Table 2: Yip, G.S. (1991)15

14

Henry Mintzberg, James Brian Quinn, 1996, The Strategy Process Concepts, Contests, Cases.
Global Strategy. In A World Of Nations Yip, George S. Sloan Management Review; Fall 1989; 31, 1; ABI/INFORM
Complete
pg. 29
15

Conceiving and developing international marketing strategies based on the framework

A marketing strategy is the process allowing an organization to focus its limited resources on the
best possible opportunities in order to increase its sales and to achieve a sustainable competitive
advantage. It should be always centered on the key concept that customers satisfaction is the
main goal, this allowing the achievement of the company final objective, that is profit. But in
order to conceive a marketing strategy there is a long and difficult way to go. Any marketing
strategy involves three basic actions that should be undertaken in order to succeed: segmentation,
targeting, and positioning. Segmentation means partitioning the market in order to select one or
more market segments to be targeted by developing specific marketing mixes adapted to
particular market needs. In general marketing, segmentation is usually done at the customer
level. Yet, in international marketing, we can treat entire countries as segments. These
approaches may cross the existence of a company undergoing an international involvement
process. We have, on one side, intra-market segmentation involving the segmentation of the
country markets and, on the other side, inter-market segmentation involving the identification of
the segments existing across borders. This latter approach can bring various benefits to the
company. The possibility to use products and promotional campaigns across markets introduces
economies of scale, while accumulating knowledge on one market may be usefully used in
another one, this involving in fact a solid knowledge management process. Yet, a fact is certain:
even if we may found similarities between segments across cultures, analyzing and
understanding the local market remains a must under any circumstances. The next step after the
separation of the market into its segments is to select one segment or several segments and to
target it/them. Here, we have three strategic approaches valid both at national and international
marketing level: the non-differentiated strategy - the differences between segments are ignored, a
single product being targeted for all segments (the whole market), the strategy focussed on a
single segment - a single product offered to a single segment on a market containing various
segments and the multi-segment strategy - different segments are targeted by supplying a series
of differentiated products. Positioning is certainly one of the useful instruments to succeed on the
market. After
having segmented the market and after having targeted the consumers follows the positioning of
the companys products on that market, that is deciding where it wants its products or services to
be placed against the crucial variables applied by its customers or by the market. What is
important to retain is that positioning is about consumers perception of a product or service in
8

relation to its competitors. Being a deeply subjective psychological factor, perception differs
from one person to another; thus we cannot expect to have the same perceptions as for quality,
value for money, etc., for the entire segment, but we shouldnt deny the existing similarities
either. Considering this, the international company is in the position to choose whether to adapt
its products to the unique demands of a country market or to gain benefits, such as cost savings
and the maintenance of a consistent global brand image, from standardization. Irrespective of its
choice, entering products on foreign markets doesnt occur suddenly; it
takes time and involves the use of specific strategies among which: exporting - a relatively low
risk strategy, few investments being made in the target country; licensing and franchising low
risk approaches consisting in offering to another company your companys trademarks and
concerned activity-related background; turnkey projects - using knowledge and expertise
gathered in one or many markets in order to provide a buyer from another country with a
working project; management agreements - managing a facility in a foreign country by using
knowledge gathered elsewhere, in other markets; agreement manufacturing - assigning to
someone else the liability to manufacture products, the company undertaking certain marketing
efforts, thus saving investments; direct entry strategies - highly risky but potentially profitable
strategies when the company either acquires another company or builds operations; an alternative
of the latter penetration strategy would be setting up a joint venture, the local company
contributing with money and knowledge about the local market. The international pricing
strategy is perhaps the most difficult thing to do in a marketing mix. Beside analysing the wellknown elements specific to any domestic pricing strategy, such as: total costs (costs of resources,
labour costs, maintenance costs etc.), company goals, level of competition (direct and indirect
competitors), level of revenue, inflation rate, unemployment rate of the target segment(s), level
of demand and so on, the company acting internationally should also consider: the transportation
costs, the customs duties, the exchange rate between the two currencies or the overall economic
standing of the target country. It is very important for a company to consider all these issues and
to establish a correct price (obviously without neglecting the quality of its goods and services),
since this doesnt affect only its current profitability but it determines the good or service
perception on the market, thus ensuring a long-term profitability or loss for that company. For
any company, adequately distributing or placing its goods or services, making them available in
due time and at the right place for its customers, is vital. This can be done by using specialized
distribution channels forwarding the goods or services from manufacturers to consumers. On the
9

international market, a natural distribution channel can be either direct, using the company own
sales force, distributors or other intermediaries or indirect, using sales agents and distributors
originating in the foreign target country. Direct distribution provides the company with much
more control but it makes it undertaking, at the same time, more responsibility and many risks,
because it has to deal with an unknown foreign market. Indirect distribution, in exchange
provides the company with very little or possibly with no control over the distribution of its
products and impedes the communication with and the feedback from the end users. This is the
reason why, when choosing its international distribution strategy, the company should consider
any available alternative and correctly assess it, taking into account the level of risk it can
assume, and finally selecting the best distribution methods. Both domestic and international
marketing mix analysis proves to be a key step in achieving effective strategy, its 4 Ps being the
driving mechanism that puts into operation the company success.

Conclusion
We live in a world getting each day closer to globalization. Given these circumstances,
undertaking international market actions becomes a necessary condition, allowing companies to
adapt themselves to this new and perpetually changing world. They have to prove a continuous
and a systematic ability to merge their capacity with the external market opportunities. But this
cannot be done all of the sudden; it involves time, knowledge, experience and dedication; it also
involves a conscious and thorough analysis of the international market, in all respects, and an
adequate planning of the future steps to be taken, this meaning in fact a constructive international
marketing strategy. Companies should find the most appropriate ways to adjust themselves to the
local market conditions; they should endeavor to conceive a marketing mix ensuring all premises
as for meeting the local demands and thus affirming themselves on the international market, as
this is, after all, the ultimate goal. Creating and implementing an international marketing strategy
directed towards guiding every single aspect of the company life, engendering new systems and
information on customers and markets and encouraging best actions and innovations, at all
companies levels, is the fundamental way to success. As world changes, companies have also to
change. This is the reason why no international marketing approach is fresh enough; it should be
continuously updated and adapted to the newly occurring conditions.

10

References
1. Daniels, J., Radebaugh, L., Sullivan, D. (2009). International Business: Environments and
Operations (12th Edition). Upper Saddle River, NJ: Pearson Education, Inc.
2. Fraser, Cynthia & Hite, Robert E., 1990. "Impact of international marketing strategies on
performance in diverse global markets," Journal of Business Research, Elsevier, vol. 20(3), pages
249-262, May
3. Yavuz Kose, CHARM 2005, Nestle. A brief history of the marketing strategies of the first
multinational company in the Ottoman Empire.
4. The Economist, Aug 2004, Daring, defying, to grow.
5. Maljers, FA 1992, 'Inside Unilever: The Evolving Transnational Company', Harvard Business
Review, 70, 5, pp. 46-52
6. Capell, K 2008, 'UNILEVER', Businessweek, 4113, p. 47.
7. 'COMPANY SPOTLIGHT: THE PROCTER & GAMBLE COMPANY' 2011, Marketwatch:
Personal Care, 10, 10, pp. 13-20, Business Source Complete, EBSCOhost, viewed 12 March
2014
8. 'Procter & Gamble's innovation success: New research, new products, new markets'
2005, Strategic Direction, 21, 7, pp. 11-13,
9. Wind, Yoram, Susan P. Douglas, and Howard V. Perlmutter. "Guidelines for Developing
International Marketing Strategies." Journal of Marketing 37.2 (1973): 14. Print
10. Howard V. Perlmutter, "The Tortuous Evolution of the Multinational Corporation," Columbia
Journal of World Business, Vol. IV, (January-February, 1969) pp. 9-18
11. Howard V. Perlmutter, Functional Studies Using the E.P.R.G. Categorization: Types of
Headquarters Orientation Towards Subsidiaries in an International Enterprise, Technical Memo
B.R. 3:2, Division for Research and Development of Worldwide Institutions, Wharton School,
University of Pennsylvania; and David Heenan, "The E.P.R.G. Approach to the Manpower
Development Function, " Working Paper 1972, Wharton School, University of Pennsylvania,
Philadelphia.
12. Prafulla Agnihotri, Hemlatha Santhanam, International Marketing Strategies For Global
Competitiveness
13. Porter, ME 1990, 'The Competitive Advantage of Nations. (cover story)', Harvard Business
Review, 68, 2, pp. 73-93.
14. Henry Mintzberg, James Brian Quinn, 1996, The Strategy Process Concepts, Contests, Cases.
15. Global Strategy. In A World Of Nations Yip, George S. Sloan Management Review; Fall 1989;

31, 1; ABI/INFORM Complete pg. 29

11

16. Arnold, David. 2003. Strategies for Entering and Developing International Markets.
Financial Times Prentice Hall.
17. Bradley, Frank. 2005. International marketing strategy. Pearson Education.
18. Cavusgil, Tamer, and Godiwalla, Yezdi. 1982. Decision-Making for International
Marketing: A Comparative Review. Management Decision 20-4: 47-54
19. Gilligan, Colin, and Hird, Martin. 1986. International marketing: strategy and
management. London: Croom Helm.
20. Doole, Isobel, and Lowe, Robin. 2007. International Marketing Strategy: Analysis,
Development and Implementation. Cengage Learning EMEA.
21. Gesteland, Richard. 2002. Cross-cultural business behavior: marketing, negotiating,
sourcing and managing across borders. Copenhagen Business School Press
22. Keegan, Warren, and Green,Mark. 2007. Global Marketing. New Jersey: Prentice Hall.
23. Onkvisit, Sak, and Shaw, John. 2004. International Marketing: Analysis and Strategy.
Routledge.
24. Porter, Michael. 1986. Competition in Global Industries. Harvard Business Press.
25. Punnett, B.J., and D. Ricks. 1997. International Business. Cambridge, MA: Blackwell
ublishers.
26. Ronkainen, Ilkka, and Czinkota, Micahel. 2002. Best practices in international
marketing. Fort Worth: Harcourt College.
27. Mercer, David. 1998. Marketing strategy: the challenge of the external environment.
Sage.

12